How can you avoid getting into trouble with bad credit card debt? You could start by avoiding the following mistakes borrowers commit:
1. Not Reading the Smaller Print:
Issuers of credit cards might tell you that the reason the terms and conditions are printed in smaller text is that they do not want to bore you with all the many details. But that is actually where they conceal the true cost of whatever you are signing up for.
As the client, you should check everything and see to it that there aren’t any traps that you could easily trigger. If the text printed the form is too small for you to read, call your card provider.
2. Misunderstanding the Introductory Offers:
It is easy to give in to a tempting headline. The marketers who write such type of headlines are paid to make them as alluring to people as possible. Oftentimes, when users of credit cards pay too much attention to the benefits of a credit card, they tend to miss checking the details, where the negative aspects are often hidden.
For instance, if credit card offer states five months interest free balance transfer, look out for interest rate and transfer fee after the interest free period ends. Additionally often included in the smaller text are conditions like, if you miss one payment, whatever is left on the offer will be withdrawn.
3. Making Only the Minimum Payment:
One advantage of using credit cards is the ease of servicing the debt — you simply have to pay the minimum percentage of your balance for every month (e.gt. 2.5per cent).
Paying only the required minimum will actually cost you more. This is because the interest is calculated by the day. For each day that you have a balance on your card, you’re being charged on interest for each penny.
4. Having a lot of Credit Cards:
Often, people believe that having many cards could help one’s credit rating. This might be true based on the balance you maintain on your card.
The downfall is that it will make it tougher to obtain new credit. Lenders will wonder whether you already have too much debt and may not be capable of making repayments. Another disadvantage is that it increases the chances of getting deeper into debt.
If you want to receive more free legal advice on finance, credit, and banking, visit Consumer Credit Legal Service (WA) Inc by clicking on the provided link.